Blockbuster fires back at Netflix with suit of its own

Netflix recently sued Blockbuster, claiming that the company was infringing on …

Another battle between corporate giants is shaping up, courtesy of the Ministry of Silly Patents, otherwise known as the US Patent and Trademark Office. In this latest round of Beat the Lawyers, Blockbuster is taking Netflix to court, claiming that the latter is trying to monopolize online rentals.

Last April, Netflix was awarded a patent based on its business method of allowing subscribers to arrange a queue of DVDs on a wish list. In this model, the next DVD on a user's list is sent out automatically as user returns his or her previously borrowed DVDs. The queue can hold several hundred choices, which can be reordered by the user as the whim strikes. Options described in the patent include plans which allow the user to check out a certain number of DVDs at once (three being the most popular number) with unlimited rentals (or turns) or take just one DVD at a time, with just two rentals per month.

Upon being granted the patent, Netflix immediately sued its corporate rival, with the goal of either closing down Blockbuster's online rental program completely, or forcing that company to pay protection money royalties to license the Netflix technology. Since neither of those things was likely to happen, it was no surprise that Blockbuster chose to fight.

Blockbuster's countersuit is clearly an attempt by that company to go on the offensive. If successful, the lawsuits will conclude and Blockbuster and Netflix will have to go back to duking it out the old-fashioned way. Even in Netflix's worst-case scenario, that company will almost certainly remain in the driver's seat: at the end of March, that Netflix's subscriber numbers were more than double Blockbuster's hopes for the end of 2006.

The continuing soap opera is just how nutty patents have become in recent years. Due to the USPTO's seeming willingness to patent almost anything, some truly lame ideas have been dragged into court: MercExchange's claim on eBay's Buy it Now button; or the Amazon patent for "one-click" payment. Even though the courts may be somewhat loathe to grant injunctions which would effectively destroy a successful business, the mere threat of that injunction is sometimes enough to provoke a settlement, no matter how baseless (or not) a patent may be.